PPACA World pain: Highmark, Illinois Blue, eHealth

A year ago, many insurers and Web-based health insurance brokers were still talking fondly about their newborn efforts to sell individual health coverage that complied with the new Patient Protection and Affordable Care Act (PPACA) underwriting restrictions and benefits mandates.

This year, companies are talking more about problems with operations involving PPACA-compliant individual health coverage.

The list of companies that have announced major strategy changes as a result of the problems includes Highmark, a major Pittsburgh-based carrier; Blue Cross and Blue Shield of Illinois, a unit of Health Care Service Corp.; and eHealth Inc., the parent of eHealthInsurance.com, one of the pioneers in efforts to create an “Amazon.com of health insurance.”

For a look at what those companies are saying, read on.

1. Highmark

Highmark has told doctors in at least some of its Pennsylvania provider networks that it will cope with big losses on 2015 PPACA exchange coverage by cutting payments to doctors 4.5 percent, effective April 1, according to an online notice summarized by the Pittsburgh Tribune-Review.

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2. Illinois Blue

Illinois Blue has joined the long list of major carriers that says it will stop paying commissions on sales of special enrollment period (SEP) business.

The Illinois Blue SEP commission cut is effective for coverage that starts April 1, according to a notice sent to producers.

The decision affects consumers under 65 who are applying for new medical policies outside the regular PPACA open enrollment period for 2016, which ended Jan. 31.

The change does not affect renewal policies, sales of dental insurance or other ancillary products, or sales of group or Medicare-related products, Illinois Blue says.

3. eHealth

The Web broker is reporting a net loss for the fourth quarter of 2015 on $50 million in revenue, including $41 million in commission revenue, compared with a net loss of $19 million, on $45 million in total revenue and $38 million in commission revenue, for the fourth quarter of 2014.

The company’s sales of individual major medical coverage through the special enrollment period (SEP) mechanism were so low for the 2015 coverage year that carrier announcements about how they will stop paying commissions for 2016 SEP coverage applications probably won’t make much of a difference to eHealth, Gary Lauer, the company’s chief executive officer, said during a conference call with securities analysts.

Another bright spot, Lauer said, is that the company began shifting away from the ordinary major medical market, and toward the Medicare market, last year.

“Given the turbulence and uncertainty in the ACA market, we are fast becoming more and more of a Medicare marketplace,” Lauer said.